Hedge Property Sales

How to Buy Repossessed or Vacant Property with Little or No Money Left in

The key to success in this strategy is to find property the value of which can be increased significantly by low cost, modest improvements.  This might include a new kitchen and bathroom, light re-plastering, painting and decorating internally, and some ‘sprucing-up’ of the exterior.  When the works are completed the property is considerably more desirable, increasing its market value.

 

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The steps to take are as follows:

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1. Apply to Hedge Property Investment (HPI) for a bridging facility, and provide us with the details required. We will inform you at the time of the lenders’ current criteria.
2. Locate the property you wish to purchase and ensure that this deal stacks up for you. For help on this, please contact HPI.
3. Complete an Application Form including property details at the current value, and receive a DIP..
4. HPI will inform you of who the local valuer is for the bridging lender, and you should contact them and instruct them to act for you directly (or we can do this for you).
5. Your instructions will ask them for their current value on the property in its existing condition, a list of dilapidations that are required to be fixed, and a fair market value once the works have been completed.
6. The solicitors will be instructed to exchange on a 10% deposit with a 4-8 week gap to completion, and the vendor’s permission for you to carry out works to the premises in that period (this process is called a ‘Key Undertaking’).
7.

Once your completion date is set, ensure that you have:

a) taken photographs before works
b) have trades-people ready to complete the work
c) started marketing for tenants
8. When the property is approximately 4-5 days from completion of the works, we will then instruct the bridging lender and provide them with a re-write of the valuation with the works now complete (we will speak with the valuer on your behalf). The valuer will make another charge for re-writing the valuation and/or possibly revisiting the premises.
9. The bridging company should, subject to your credit profile, fund to a maximum of 70% of the new market value of your property, which means that you should be able to recover the deposit you have paid at exchange.
10. Make sure your tenants are in place 1 day after completion to maximise your profits.
11. 8 weeks after this, apply for a re-mortgage to which you will then be able to provide the new valuer with your previous valuations and of course a signed AST so that there can be no dispute over the rental being paid and that the house has been improved from its previous state.

* NOTE Please remember that this is a short-term funding strategy, and you should ensure that a re-mortgage would be available to you at the end of 3 or 6 months.

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